New Delhi: India’s current account deficit is within manageable levels, the country’s Economic Survey 2018-19 said on Thursday.Also Read - 7th Pay Commission Latest News: Karnataka Govt Employees to Get 4.75% DA Hike Ahead of Diwali
The current account is the net difference between inflows and outflows of foreign currencies. Also Read - Direct Tax Target Realistic, Achievable: Revenue Secretary Ajay Bhushan Pandey
According to the survey, although the CAD increased to 2.1 per cent of GDP in 2018-19, up from 1.8 per cent in 2017-18, “it is within manageable levels”. Also Read - 50 Days of Modi 2.0: NDA's Second Term Indicates Huge Transformation For Next 5 Years
“The widening of the CAD has been driven by a deterioration in the trade deficit from 6 per cent of GDP in 2017-18 to 6.7 per cent in 2018-19,” said the survey, tabled in the Parliament by Finance and Corporate Affairs Minister Nirmala Sitharaman.
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“Rise in crude oil prices in 2018-19 led to the deterioration of trade deficit.”
However, acceleration in the growth of remittances prevented a larger deterioration of CAD.
As per the survey, in funding the CAD, the total liabilities-to-GDP ratio, inclusive of both debt and non-debt components, has declined from 43 per cent in 2015 to about 38 per cent at end of 2018.
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“Further the share of foreign direct investment has risen and that of net portfolio investment fallen in total liabilities, thereby reflecting a transition to more stable sources of funding CAD.”
In sum, although CAD to GDP ratio has increased in 2018-19, the external indebtedness continues to be on a declining path.